opinion

Markets feel pressure as weather improves

Most of the week saw pressure across agricultural commodity markets (save for the rally during Friday's trade). There were a few things going on to move markets lower, but the most obvious was the weather. Across the Canadian Prairies, U.S. Corn Belt, and Central Plains, rain finally gave way to some consecutive days suitable for farmers to get into fields. Soybeans and corn were harvested in the U.S., remaining crops like canola and pulses were harvested in Canada, and winter wheat was planted.

Adding to pressure was a stronger U.S. dollar. This strength makes exports from the U.S. more expensive to foreign buyers, thus commodity prices came under pressure. Wheat export outlook remains weak, as long as Russia continues to sell. Soybean export sales usually pick up in this time of year as harvest is rolling, but due to the trade war with China, sales have been incredibly weak. Unless there is a policy change soon, look for sales to continue to be below any year in recent memory, which will swell supplies in the U.S.

Buyers stepped in on Friday to capture the recent market downside, so the rally was largely technical. Ongoing support is not anticipated.

Wheat

Wheat prices were lower all week before a big rally Friday. The market came under pressure from improved weather in the U.S. allowing for winter wheat planting. Reports show 72 percent of the crop has been planted compared to 77 percent for the five-year average pace. Look for good progress to be made in Monday's report from the U.S. Department of Agriculture, but weather is expected to turn wet again in the middle of next week. The stronger U.S. dollar added to pressure for wheat, as foreign buyers will choose other, more affordable destinations like Russia or the EU. There was a sale to Egypt this week which was a part of Friday's rally, though much of that support was from technical buying.

Durum

Durum prices remain depressed. With comfortable supplies and harvest complete, there is little to get the market going in the coming months. Expect prices to stay near these low levels.

Canola

The canola market has been under serious pressure in the last week. Support for canola had been hanging on, keeping a premium over other oils. But improved weather in the Prairies has allowed farmers to get most of the remaining crop harvested, alleviating fears that some would have to be left for the spring. Output may end up being below a year ago and demand remains good, but it is difficult for there to be much support with improved harvest weather and pressure for soybean oil.

Peas and lentils

Pulses are likely going to see some pressure as harvest winds down. Ongoing trade concerns with India are limiting upside. And now that conditions improved for farmers to harvest, it appears that pulse production could be larger than originally expected by Statistics Canada.

Mustard Seed

Mustard seed prices have not changed much in the last few weeks. But farmers are finally able to get back into fields for harvest. Prior to this week, 80 percent of the crop was done though there had been no progress made in a week. Now that farmers are able to get into fields for harvest, look for much of the crop to be done in the next report. Quality may be an issue, but no reports have been made on that, yet.